ORAL ARGUMENT OF JOHN G. DE GOOYER, ESQ., ON BEHALF OF THE PETITIONERS

Chief Justice Burger: We will hear arguments next in Chardon against Soto.

Mr. DeGooyer, you may proceed whenever you are ready.

Mr. De Gooyer: Mr. Chief Justice, and may it please the Court, nine years ago this Court, in American Pipe and Construction Company versus Utah, held that the statute of limitations is temporarily suspended in federal class actions until the District Court determines whether to certify the class.

The issue in the case before the Court this morning is whether the rule of American Pipe applies to federal class actions brought under the Civil Rights Act of 1866.

We think the answer to that is clearly yes.

A number of lower courts have held that it applies, and only one court to our knowledge, and that is the court below in the instant case, has held that it does not.

The relevant facts are few and undisputed.

The Respondents are teachers in the Department of Education of Puerto Rico.

During the 1976-1977 school year, they held temporary one-year administrative positions in the department.

Toward the end of that year, they received formal notification that their appointments would not be renewed.

Approximately one year later, in June of 1978, a teacher who had received notification of non-reappointment, Mr. Jose Ortiz Rivera, who is not a respondent in this case, brought an action in the Federal District Court in Puerto Rico as a class action on behalf of himself and a class of persons who he contended had been victims of discrimination on account of their political beliefs.

Relief was sought under 42 United States Code Section 1983, and pendent state claims were asserted.

The defendants were the petitioners in this case.

It is undisputed that as of the date Ortiz Rivera filed his class action, the statute of limitations had not yet run against the respondents.

Approximately two months after the lawsuit had been filed, the District Court denied class certification on the grounds that the class was not so numerous as to make joinder impracticable.

It is undisputed that thereafter none of the respondents took any action on their own behalf to press their claims against the petitioners for five months, until January of 1979, when they brought individual lawsuits.

The petitioners filed answers in each case, and in each answer asserted as an affirmative defense that the statute of limitations had run.

Eventually, the cases were consolidated for trial, bifurcated on the issue of liability and damages.

The District Court reserved decision on the limitations issue.

The cases were tried in January of 1981, and verdicts were entered for the respondents.

Judgment was finally entered.

On appeal, the First Circuit found that the respondents' actions had been timely filed.

Although the Court recognized that if the rule of American Pipe and Construction Company were applied here, the statute of limitations would have been suspended when Ortiz Rivera filed his lawsuit, but that it would have resumed running when class certification was denied, and that the statute would have expired as to each respondent before and indeed well before his individual action was filed.

The court concluded, however, that it could not apply American Pipe and Construction Company because of this Court's decision in Board of Regents versus Tomanio, and the court below specifically held on the basis of that decision that the rule of American Pipe and Construction does not apply to cases brought under Section 1983 of Title 42.

Instead, the court felt constrained to look to state law to find the tolling rule.

Even though when the court looked to state law, or Puerto Rico law, it found, and I quote, "no discernible state rule" applicable to class actions, it fashioned a rule.

It fashioned a rule by borrowing the aspect of American Pipe and Construction Company, that aspect of the rule that filing of a class suit tolls the running of the statute of limitations, and then it found that when class certification was denied, a Puerto Rico rule applicable in other circumstances came into play.

Under that rule, the entire original statutory period of limitations began to run anew.

Each respondent therefore had another year within which to bring a lawsuit, even though at the time the class suit had been filed most of them had about three weeks left remaining in their statutory period.

Unidentified Justice: And what was the ground?

What was the ground for rejecting American Pipe in terms of--

Mr. De Gooyer: The court below, Justice White?

It was that the... this Court's decision in Board of Regents versus Tomanio interpreting Section 1988 mandated state law and not federal law applied.

Unidentified Justice: --Well, partly wouldn't you also say, Mr. DeGooyer, that the last paragraph of the Court opinion in American Pipe and Construction, which at least your opponents read to suggest made that the suspension aspect of the ruling depend on the Clayton Act rather than on a rule peculiar to federal class action?

Mr. De Gooyer: Right.

I disagree with that entirely, Justice Rehnquist.

I think that that--

Unidentified Justice: You disagree with my statement or with your opponent's... what I think is your opponent's view?

Mr. De Gooyer: --I agree with your statement that the opinion so reads.

I disagree with the notion that the American Pipe rule, the suspension aspect of the American Pipe rule is in any way dependent upon the Clayton Act.

There are numerous lower court cases, and of course they are not controlling, but there are numerous cases cited in our brief where lower courts have used the suspension rule in Title 7 cases, in various kinds of cases, securities cases, but more importantly to me, at least, was this Court's decision in United Airlines versus McDonald.

That case was decided three and a half years after American Pipe and Construction Company.

In that case, and it was a Title 7 case, the eight members of the court that decided that case all sat on the American Pipe court, which was unanimously decided.

The issue in the United Airlines case was whether or not American Pipe and Construction Company had any application, and while the majority and the minority disagreed as to the scope of the rule, no one disputed the fact that the rule would have applicability in a Title 7 case, and indeed the minority so stated.

So, I don't have any problem with that at all.

I think there is no limitation there.

Contrary to what the First Circuit held, we believe that the American Pipe rule controls this case, that it is a uniform rule of federal procedure, that it applies generally to all class actions, regardless of subject matter and regardless of the statute of limitations that is applicable.

And as I have just discussed, I think that the Clayton Act in no way gave the rule its suspension aspect.

At the same time, we do not believe that the rule is two rules, as the respondents contend.

There is no basis in the American Pipe opinion for that, in my judgment, and no court has ever held that this is actually two rules.

Suspension by its very meaning means stopping temporarily.

This is consistent with what the Court was doing in establishing the rule.

It was protecting the District Court from a flurry of activity while it decided whether to certify the class.

As the Court said in American Pipe, Rule 23 is eviscerated if people will be coming in, filing protective motions to intervene while the Court is deciding whether it is a class or not.

Suspension fully satisfies the needs of judicial efficiency and economy while preserving the rights and obligations of the parties as of the date the class suit was filed.

The analogy I use is, it is snapshot.

There is a snapshot taken at the date the lawsuit is filed.

The rights and the obligations of the parties are fixed at that point.

Certainly the statute of limitations is fixed at that point.

If class certification is denied, the statute resumes running.

Everybody stands where they were at the time the suit was filed.

That is fair to both sides.

And at the same time, it fosters the court's and the defendant's interests in repose.

Unidentified Justice: May I ask a question--

Mr. De Gooyer: Yes, Justice Stevens.

Unidentified Justice: --about something you said about the Puerto Rico law?

As I understood you, you said the First Circuit fashioned the tolling rule--

Mr. De Gooyer: Yes, sir.

Unidentified Justice: --by applying... by saying that Puerto Rico would in effect apply a counterpart to the American Pipe case, but is it not true that with respect to the second question, namely, for how long the tolling period is, that they relied on Puerto Rico law for saying the statute starts to run all over again.

Mr. De Gooyer: Puerto Rico law in a different context, Justice Stevens, if I may.

The statute that is being construed, the Puerto Rico statute that is involved in Section 5303 of Title 31.

That statute very specifically refers to the three methods of tolling under Puerto Rico law.

There is no question that when tolling has properly occurred in Puerto Rico, that the statutory period begins running anew, but the authorities in Puerto Rico law are absolutely crystal clear that the tolling in Puerto Rico must be not only strictly construed by restrictively construed, and I refer to the case of Diaz versus... Diaz de Deana that we have cited in our brief.

Because the result is a running anew, even the courts of Puerto Rico say that you must restrictively interpret that rule of tolling.

Unidentified Justice: So your position really, if I understand you correctly, is not that they tolled it for the wrong period, but there should have been no tolling at all.

Mr. De Gooyer: That's correct.

That's correct.

Yet the respondents maintain, as we just discussed, that the rule of American Pipe itself is two rules.

That is, the federal rule is two rules, a general tolling rule and a precise tolling effect rule.

They derive that, as Justice Rehnquist suggested, from the language in the last paragraph of American Pipe, where the Court was saying it remains to determine the precise effect the commencement of the action had on the statute of limitations.

I think in our brief we make clear at least this is our view that that was the Court's recapping, where we stood at the time the lawsuit was filed.

Eleven days left to run in the statute.

The motions came eight days after class certification was denied.

That was less than eleven days, therefore timely filed.

Unidentified Justice: What if this hadn't been a class action?

When the suit was filed, there was a statute of limitations claim presented by the defendants.

Would Puerto Rico law have applied as to whether or not the statute of limitations had already run?

Mr. De Gooyer: Let me see if I understand the hypothetical.

Unidentified Justice: It is not a class action.

It is just, the plaintiff files in 1983... This was a 1983 case.

Mr. De Gooyer: It was indeed.

Unidentified Justice: And the defendant moves to dismiss on the grounds that the statute of limitations has already run.

Mr. De Gooyer: Well, it either would have run or it wouldn't have run.

I don't quite understand the question, Justice--

Unidentified Justice: Well, but it would have been... my question is, what law would... what statute of limitations would apply?

Mr. De Gooyer: --We would use the one-year Puerto Rico statute of limitations, which we are in fact using right now.

Unidentified Justice: And if there was some claim of tolling in the case, it would be Puerto Rico law, too?

Mr. De Gooyer: Yes, indeed.

Unidentified Justice: And for how long it would have tolled?

Mr. De Gooyer: One year.

Unidentified Justice: Yes.

Mr. De Gooyer: And that is because Section 5303 specifically covers the situation.

Unidentified Justice: I understand.

I understand, but now you say... now you say that Puerto Rico law, however, does not... shouldn't govern because a class action is involved here.

Mr. De Gooyer: I certainly do say that, and I also say it is very easy to say in this case, because there is no Puerto Rico law that covers this situation as the First Circuit so said.

Unidentified Justice: But those are really two quite distinct positions.

Mr. De Gooyer: They are indeed two questions.

Unidentified Justice: I take it your underlying position is that American Pipe is based on the Rule 23 class actions--

Mr. De Gooyer: Absolutely.

Unidentified Justice: --and provides a federal rule of tolling no matter what the substantive origin of the claim.

Mr. De Gooyer: That is entirely correct.

That is our position entirely.

And that satisfy's the Rule's Enabling Act as far as we are concerned.

I think it is interesting to look at the reasons why the respondents have looked at this rule of American Pipe as two rules.

They have carved up the general tolling part of American Pipe and said, we will take the benefit of that.

They have then said, we will go to the Puerto Rico running a new rule, and we will take the benefit of that, and by the way, that gives us a substantive right to one year under Puerto Rico law, and the circularity of this reasoning is fairly amazing, because now that they've had the substantive right derived from American Pipe, they turn around and say American Pipe cannot abridge that right and therefore violates the Rules Enabling Act.

They cite a number of cases in their brief that refer to limitations, that allegedly give them a substantive right to one year's worth of tolling, where in fact those cases talk about the limitations of actions being substantive in Puerto Rico.

That indeed is why the tolling statute in Puerto Rico is to be restrictively construed, not merely strictly construed.

In any case, as Justice Rehnquist suggests, it is our position that the rule of American Pipe clearly regulates only procedure in the federal courts in class actions.

It preserves the status quo as of the filing of the class action.

It permits Rule 23 to operate as intended.

It is clearly within the Congressional power delegated, and it would pass muster in my judgment if this were an Erie case.

It clearly passes muster in a federal action, federal question case.

And indeed, Tomanio and state law never come into play as far as we are concerned on the rule of American Pipe.

Now, if we turn to Tomanio, however, I don't think Tomanio applies.

The case there is a wholly different case from this case.

In Tomanio, there was no compelling federal reason, there was no compelling reason at all for federal tolling.

The question presented there was, did the pendency of Mary Tomanio's state claims toll the running of the statute as to her constitutional claims.

New York law had no rule, had no statute.

So the lower courts fashioned the federal tolling rule to preserve her constitutional claims, essentially in furtherance of their view of federalism.

This Court found the absence of a tolling statute in New York to mean that New York intended no tolling to occur, and that therefore the interests of federalism were better served by following the New York no tolling rule.

If that principle were applied to this case, there would be no tolling at all.

Mr. De Gooyer: I don't... well, let me say, what the First Circuit did was this, Justice Rehnquist.

They took the federal rule of American Pipe, which they acknowledged to be the federal rule.

The respondents in this case acknowledged that to be the federal rule.

They have even said it mandates general tolling.

What the First Circuit said was, there is no rule in Puerto Rico.

I will therefore fashion a rule.

They fashioned the rule, as I said earlier.

Unidentified Justice: From state law?

Mr. De Gooyer: They fashioned a rule which they believed to be state law, which has no foundation in the law itself, and which--

Unidentified Justice: But that is true... federal courts lots of times have to do that--

Mr. De Gooyer: --I certainly--

Unidentified Justice: --in diversity cases, or in a case like this, where they have to say, true, there isn't a decided Puerto Rico case on the subject.

We have got to figure out what the Supreme Court of Puerto Rico would do.

Mr. De Gooyer: --There are indeed decided cases that would indicate to the contrary, which we have cited to the Court in our reply brief.

We certainly understand that in ordinary circumstances, the Court... this Court will defer to a circuit court in its judgment of what a state law may be, but the only way they have derived the so-called state law here is to say by analogy the federal court has a Rule 23.

American Pipe has interpreted Rule 23 to mean this.

We acknowledge that if Rule 23 and American Pipe apply, the federal rule, the federal interpretation of this very Rule 23, here is what happens: suspension, resumption, and expiration.

They then go and by analogy move into rule... the comparable rule in Puerto Rico of procedure, and they say it is modeled exactly after the federal rule, but we think that Puerto Rico will not follow the federal rule even though it is patterned after that.

It will take the tolling portion of it and then apply the running anew portion.

Unidentified Justice: Well, I understand your position to be that even if the Puerto Rico law was just as clear as a bell, that you would... that American Pipe, to the contrary, American Pipe would still govern.

Mr. De Gooyer: Yes.

Unidentified Justice: Even if there was a Puerto Rico rule that said, after tolling, the period starts running all over again, even if it was perfectly clear.

Mr. De Gooyer: Well, that's--

Unidentified Justice: That American Pipe would still determine otherwise in this case.

Mr. De Gooyer: --Absolutely.

I think--

Unidentified Justice: And also you did not raise your challenge to the Court of Appeals' interpretation of Purto Rican law in the questions presented, did you?

Mr. De Gooyer: --I think what we... what we raised in the questions presented was whether the rule of American Pipe and Construction Company, which is a federal rule, applies, and indeed... anything in this Court's decision in Board of Regents versus Tomanio would preclude application.

Unidentified Justice: Sure, but you did not raise a dispute with the Court of Appeals' interpretation of Puerto Rican law.

Mr. De Gooyer: That is certainly correct.

It has been assumed that that would be the law, but it--

Unidentified Justice: I have another difficulty--

Mr. De Gooyer: --Yes, Justice Stevens.

Unidentified Justice: --with your argument, if I understand it correctly.

I understood you to say that the Court of Appeals first found that there was no Puerto Rican authority for tolling in the first instance.

Mr. De Gooyer: That's correct.

Unidentified Justice: And that they... I don't see... Page 16-A of the opinion says that the Puerto Rican law provides there is tolling when an identical cause of action is filed, and then they say the class action is an identical cause of action, and therefore under Puerto Rico law there is tolling.

That is the way I read it anyway.

What language do you rely on for a different reading?

Mr. De Gooyer: I have the opinion.

If you will forgive me for one moment, I will look.

0....

Unidentified Justice: It says the substantive claims asserted in the class action were identical to those in the subsequent individual actions.

Mr. De Gooyer: Well, in the first point... in the first place, that... the Puerto Rico rule of identical actions does not cover the circumstance.

There is no case anywhere that covers the identical question that the First Circuit drew on.

Unidentified Justice: Well, but there is a Puerto Rican law... a rule that if it is an identical action, there is a toll.

Mr. De Gooyer: By the same individual that refiles, yes.

Unidentified Justice: And then the question is whether a class action comes within that rule.

That's the question, and--

Mr. De Gooyer: Well, indeed, as we have cited in the Caguas Lumberyard case, there is authority to the contrary that the filing of a purported class action by a representative of the class does not involve any of the other people as so-called parties to the action.

They are not advancing their action in court unless those absent parties come in.

The way we read this is, you can't simply--

Unidentified Justice: --But you were telling me that the Court of Appeals had said that Puerto Rican law was silent on it.

Mr. De Gooyer: --Well, let me find the--

Unidentified Justice: Or in fact--

Mr. De Gooyer: --If I could only find the rule--

Unidentified Justice: --Which I didn't find in the opinion.

Mr. De Gooyer: --All right.

0....

Well, I don't have the slip opinion, Justice Stevens.

What I have is the--

Unidentified Justice: Well, I am relying on your cert position.

I hadn't found that argument in your brief.

That is why I was having trouble following it today.

Mr. De Gooyer: --Well, in any case, it is absolutely true that they said that Puerto Rico has no discernible state rule.

That is no... There is no dispute about that.

Unidentified Justice: Well, they have the identity rule.

Mr. De Gooyer: Well, they have--

Unidentified Justice: And you agree with that, don't you?

Mr. De Gooyer: --I agree that Puerto Rico has by judicial decision held that when an individual brings a lawsuit and it is dismissed for procedural reasons and he refiles a lawsuit that is identical to the first lawsuit, then he satisfies the identical requirement.

Unidentified Justice: All right.

Mr. De Gooyer: That is what the cases say.

Now, we have found the place that I was looking for, and that is at least in the joint appendix at the top of 135-A, is where the Court says,

"In the instant case, though, there is no discernible state rule. "

That is after the Court has said that it feels that it must look to state law because of 1988.

It looks to Section 1988 but finds no discernible state rule applicable to class action.

As I was saying earlier, in the Tomanio decision, there was no compelling federal reason for tolling, or for federal tolling.

Here, of course, there is, and as we have already discussed, this is a class action.

We think that the Rule 23 special rules that apply there have to be given effect.

It is the federal procedural policy underlying the rule, efficiency and judicial economy, that even give rise to the tolling here in the first place.

Even the respondents agree, as I have said several times, that American Pipe mandates general tolling.

Under those circumstances, we needn't even go into the 1988 choice of law analysis, but as we have also argued in the brief, Section 1988 provides on its face that state law applies unless it is deficient.

Then you go to federal law... I mean, then you go to state law.

You apply federal law.

If it's deficient, you go to state law.

In this case, federal law is not deficient.

American Pipe provides the rule of decision, and we think that a decision of this Court interpreting a federal rule of civil procedure has sufficient stature to qualify for the federal preference under Section 1988.

And as I have said further in discussions with Justice Stevens, even if we go down to state law, the Court itself found at least in the tolling aspect no discernible state rule, and there is no doubt about that, and then it fashioned--

Unidentified Justice: But I notice that in that part of the opinion, that's the paragraph after they had decided that the class action was identical, and where they were rejecting the estoppel argument.

Mr. De Gooyer: --Well, I--

Unidentified Justice: In any event, you really are asking us to make a fairly close examination of Puerto Rican law, it seems to me.

Mr. De Gooyer: --No, I think--

Unidentified Justice: To second-guess the First Circuit on it.

Mr. De Gooyer: --No, I think that regardless of what Puerto Rico law provides, that Rule 23 governs the tolling here as a single rule of suspension and not a two-part rule.

The way I get to that, Justice Stevens, is, if we had a jurisdiction with a law that said, under no circumstances shall there be tolling at all, period, under any circumstance, if we apply the two-part test, we toll, then what do we do?

We look to state law, and it says no toll.

What do we do?

Unidentified Justice: You don't toll.

Mr. De Gooyer: Toll, no toll?

Well, we've tolled once.

Then we no toll?

I think that Rule 23 provides a single rule of suspension that is applicable in federal courts for all the reasons that Rule 23 exists, and there should be no exception for Section 1983 cases, but an affirmance of this case drives a wedge between Rule 23 and civil rights actions in the federal courts when they are brought certainly as class actions, but why not drive a wedge between a 1983 individual action and Rule 3?

Is Bomar versus Keyes in doubt?

Why not drive a wedge between Section 1983 cases and Rule 4?

Service of process.

Mode of service.

Why not drive it in between Rule 6, computations of time?

Or Rule 15 on relation back of amendments?

There is no basis for that.

The federal courts have their rules as housekeeping rules to operate efficiently, to operate in the interest of justice, and for all of these reasons, and all the reasons that we have discussed, the judgment below should be reversed.

Chief Justice Burger: Mr. Nahmod?

ORAL ARGUMENT OF SHELDON NAHMOD, ESQ., ON BEHALF OF THE RESPONDENTS

Mr. Nahmod: Mr. Chief Justice, may it please the Court, as counsel for petitioners observed, we are here dealing with 36 cases.

Thirty-six plaintiffs, who are the respondents here, were found by a Puerto Rico jury to have lost their jobs for political reasons.

They belonged to the wrong political party.

The issue in the case, as set out earlier, is the following.

Does Puerto Rico tolling law, that is, the Puerto Rico tolling law of renewal, govern the denial of class certification for lack of numerosity, or does some other rule when we are talking about Section 1983 federal class actions?

Indeed, we are talking about more than Section 1983.

We are talking about Section 1981, 1982, 1985, and 1986 as well.

There are two considerations that I was hoping to mention at the outset.

The first consideration is that Puerto Rico has a very strong interest in having its tolling rule apply.

The Puerto Rico tolling rule of renewal reflects Puerto Rico's judgment as to the proper balance between repose on the one hand and fairness to injured parties on the other.

There is a related interest in federalism.

Puerto Rico has a Spanish civil law based system.

Louisiana has a comparable civil law system, but it is based upon the French civil law.

A second threshold consideration is that there was no unfair surprise to the defendants in these cases because they knew about all of these plaintiffs' causes of action.

No unfair surprise, no lost witnesses, no stale memory at issue in these 36 cases.

By way of background it is important, I think, to start off with this Court's decision in Tomanio.

As a general matter, this Court in interpreting Section 1988 has held that where federal statutory law is deficient, a federal court must look, must look at relevant state law unless that relevant state law is inconsistent.

Justice White: The reason Puerto Rico's statute of limitations is relevant to this case at all is because of the absence of the federal statute of limitations.

Mr. Nahmod: If Section 1983 itself contained a statute of limitations, then we wouldn't be here today.

Justice White: Well, and I take it the submission on the other side is that although there isn't a federal statute of limitations, there is a federal rule about tolling in class actions, and therefore, to that extent, Puerto Rican law is irrelevant.

Mr. Nahmod: Your Honor--

Justice White: That is the submission.

Mr. Nahmod: --Yes, I understand that, Your Honor.

Justice White: And what is your answer to that?

Mr. Nahmod: They are basing their primary reliance on this Court's decision in the American Pipe case.

In so doing, we submit that they misread it.

Justice White: Well, the American Pipe did hold that in a class action the filing of the action tolls and for just as long... up until the time the class action is denied, and time then begins to run again.

Mr. Nahmod: Yes, that's correct, Your Honor.

The American Pipe decision can be broken down into two important aspects, it seems to me.

The first aspect is what we call in our brief general tolling.

That is, when a federal class action is filed, whether it is a 23(b)(1), (b)(2), or (b)(3) class action, as American Pipe was--

Justice White: Well, what if Puerto Rican law said that filing of the class action does not toll anything for the unnamed members of the class?

Mr. Nahmod: --If that were the case, Your Honor, then we would... there would be no tolling.

Justice White: So you say that the first part of American Pipe doesn't apply here either, as a federal rule.

Mr. Nahmod: Your Honor, that depends upon which one of our first two arguments one looks at.

It seems to us with respect to an interpretation of American Pipe that this Court held in American Pipe that one looks at the limitation scheme underlying the particular substantive cause of action.

In a section in the American Pipe case itself, the substantive cause of action was Section 5(b) of the Clayton Act.

That provision provided... that provision set out a suspension approach to tolling.

Justice White: Well, that was just with respect to when the government suit was filed, and then the Court went on in the last paragraph and said a similar concept.

This is a court-crafted rule under Rule 23.

Mr. Nahmod: But it was based upon this Court's--

Justice White: Well, it said a similar concept.

It was just by analogy that they referred to the Clayton Act.

Mr. Nahmod: --Your Honor, when the Court in American Pipe was trying to balance the Rule 23 interests on the one hand against the appropriate interest in the statutes of limitation on the other, this Court appropriately, in our opinion, looked to the Congressional purpose underlying the particular substantive cause of action.

There are numerous... there are at least three different approaches to tolling that this Court could have used in the American Pipe case.

One possible approach to tolling is an extension approach.

Justice White: But they just chose one of them.

Mr. Nahmod: And that is because the Clayton Act itself provided for suspension.

I think this Court in American Pipe felt bound to look at what Congress had said.

Justice White: Well, that is just according to how you read it.

It was still a court decision as to what should apply, what the effect of a class action should be under Rule 23, and it looked around and said, well, by analogy, a case is tolled, a statute is tolled when the government files a suit.

Mr. Nahmod: Well, Your Honor, suppose--

Justice White: We will just... We will apply a similar rule to this.

Mr. Nahmod: --But, Your Honor, our position is, suppose in American Pipe the Clayton Act limitations and tolling schemes had provided for renewal of the period of limitations.

We submit that this Court in American Pipe would have set out a tolling rule of renewal, but this--

Justice Rehnquist: That is based almost entirely, isn't it, on V of the opinion in that last paragraph?

It seems to me you can read the other parts, from I through IV, and sense that the Court isn't relying much, if at all, on the nature of the substantive cause of action.

Mr. Nahmod: --Your Honor, that is because... I understand what you are saying.

That is because the major portion of the American Pipe case dealt with the general relationship between Rule 23 on the one hand and statutes of limitation in general.

This Court was explaining why, even with a so-called spurious or Rule 23(b)(3) class action, this Court was explaining why the statute of limitations would be tolled for all unnamed members of a class once a class action was filed in federal court.

That is the body, that is the major portion of the Court's opinion.

When it set out all of this in general terms, it then went on to deal with the issue that we are addressing here: what is the precise effect of our general discussion in this particular case?

And the precise tolling effect had to be obtained by looking at the Clayton Act itself, in the same way that we suggest in this case, in these 36 cases, a federal court would have to look at the limitation scheme governing Section 1983 causes of action.

Justice Rehnquist: But the Clayton Act itself didn't in haec verba provide for this kind of tolling, did it?

Mr. Nahmod: The Clayton Act on its terms, on its own face, provided only for suspension.

But I'm not sure what you mean, Justice Rehnquist, when you say for this particular kind of tolling.

Can you explain that?

Justice White: Well, it didn't mention class actions.

That's the point.

It didn't say what the effect of filing a class action would be.

Mr. Nahmod: But this Court--

Justice White: The Clayton Act didn't.

Mr. Nahmod: --I think that's right, but I think this Court had to choose an appropriate rule which would accommodate the interests that reflected Congressional enactment of the statute of limitations for the Clayton Act to begin with.

Justice White: What would you suppose... What would you say if Rule 23 itself said that when a class action is filed, it shall suspend the filing of... the running of a statute of limitations, but only for so long, but only up until the time the action is--

Mr. Nahmod: Well, Your Honor, in that case, we would have to skip both our first and second arguments and get to a very difficult and broad issue involving the validity of that as a practical--

Justice White: --The constitutionality.

Mr. Nahmod: --Not constitutionality, no.

We have raised no constitutional issues here.

We are talking about the--

Justice White: Validity?

Mr. Nahmod: --validity as applied to these Puerto Rico plaintiffs of the Rule 23... the Rules Enabling Act issue.

This will be a rules enabling Act question.

Justice White: Well, but the Rule 23 is a Congressional enactment.

Mr. Nahmod: Yes, it is, Your Honor.

Mr. Nahmod: But it also provides in relevant part that the rules must be procedural for one thing, and secondly, they must not abridge substantive rights under state law.

Mr. Nahmod: That is our third argument.

We need get nowhere near the third argument, it seems to me, Your Honor, if we read American Pipe narrowly.

This was our first argument for the proposition that this Court held in American Pipe that one must look at the limitation scheme for the particular substantive cause of action, and when we have a Section 1983 class action, as Justice White mentioned earlier, we don't have a particular statute of limitations.

Congress has left that open.

Justice Stevens: May I ask you a question?

Mr. Nahmod: Of course.

Justice Stevens: Under your view of the Court of Appeals opinion, what is the source of law that determined the fact that there should be tolling?

Was it federal or state?

Mr. Nahmod: The Court of Appeals seemed to rely solely on state law, both with respect to general tolling effect and precise tolling effect.

Justice Stevens: What do you think the consequence would have been if the federal Rule 23 read the way Justice White says, that there always should be tolling for just this period, and there were a Puerto Rican statute that said there shall not be tolling in any class action... class action shall not toll?

What would be the right answer?

Mr. Nahmod: I understand, Your Honor.

We are talking about a Rule 23 interpretation now, general--

Justice Stevens: Well, I am asking, would there be... would there be tolling if you had a conflict between the language of Rule 23, that talked about class actions generally, and you had these individual actions in which the plaintiffs would claim there was tolling on the basis of Rule 23 but the defendants would say, no, but we have a Puerto Rican statute that says we never toll.

Mr. Nahmod: --In that situation, assuming Rule 23 as applied would be valid under the Rules Enabling Act, that would be the end of it.

We would concede that.

If I understand your question.

If Rule 23 itself provided that there were a tolling rule of suspension in all class actions.

Justice White: As interpreting Rule 23 as containing such a provision.

Mr. Nahmod: --Your Honor, that gets... Your Honor, we submit that American Pipe does not do that.

The American Pipe rule is a judicially created rule reflecting--

Justice White: Well, it is a construction--

Mr. Nahmod: --Pardon?

Justice White: --It is a construction of some federal law, isn't it?

Mr. Nahmod: It is not an interpretation of Rule 23 as such, Your Honor.

Justice White: Oh, it isn't?

Mr. Nahmod: It is a judicially created common law procedural rule.

Justice White: But it is certainly based on Rule 23.

Mr. Nahmod: It is based upon or related to the interests protected by Rule 23, but Your Honor, Rule 23 on its face says nothing at all about tolling.

The advisory committee report--

Justice Rehnquist: Well, Rule 26 or whatever rule it is that allows an imposition of sanctions for violation of discovery may not say anything about dismissal, but certainly the courts were free to find that dismissal was an appropriate sanction.

I think most courts in saying that would say they were interpreting Rule 26.

Mr. Nahmod: --Your Honor, there is a difference in our opinion between a judicial decision interpreting a rule and a judicial decision which sets out its own rule simply by looking at interests set out in, say, Rule 23.

This Court said time and again in the American Pipe case that it is a judicial... judicially created tolling rule that we are setting forth.

This Court was concerned in American Pipe with its power, its power to toll statutes of limitations in federal court.

Justice White: Well, however you put it, it is nonetheless a federal law rule about the impact of a class action on the statute of limitations.

Justice White: And suppose American Pipe had just said that we... in so many words that this is the impact of a filing of a class action on the statute of limitations in all kinds of actions, no matter what.

We just want to settle it.

Mr. Nahmod: --And we would submit that because of the mandate of Section 1988, that is improper to do, in the same way that this Court rejected the propriety of a judicially created rule of tolling in the Board of Regents versus Tomanio case, in the same way this Court rejected the propriety of a judicially created rule of survivorship in Robertson v. Wegman.

It is inappropriate... and this is our second argument... it is inappropriate with Section 1983 class actions.

Justice White: But 1988 just says, the federal law is in a sense non-existent.

You concede that you wouldn't have this kind of an argument if Section... if Rule 23 on its face announced the American Pipe type of rule.

Mr. Nahmod: Well, Your Honor, the concession--

Justice White: Because then the federal law wouldn't be deficient for purposes of 1988.

Mr. Nahmod: --If the earlier concession was limited, we would still argue, even if Rule 23 governed this, that one would have to still look at the underlying cause of action.

Justice White: Well, I understand that.

Mr. Nahmod: For its limitation scheme.

Justice Rehnquist: But you are talking about really fashioning a tolling rule in two different ways under federal, aren't you?

In Tomanio the question was, do you fashion a federal rule solely for 1983 type cases under 1988 rather than a federal rule all across the board based on the Federal Rules of Civil Procedure.

Mr. Nahmod: Yes, Your Honor.

We suggest that when this Court spoke in the Tomanio case about Section 1988, it was basing its reading of Section 1988 on the existence of a void in federal statutory law.

We submit that the judicial tolling rule of American Pipe if such should be is not a federal statute.

It is a judicially created rule.

It doesn't matter, it seems to us, whether that--

Justice White: So it can't supply the void, the federal void for purposes of 1988?

Mr. Nahmod: --Not at all, no.

Section 1988 is an independent... is a federal statute which this Court must follow in Section 1983 cases and other cases to which it might be applicable.

This Court does not have the power, we submit, under Section 1988, to create a federal procedural common law in this... in this respect, unless it is inconsistent, unless it is inconsistent with the policy underlying Section 1983.

There has been no such claim by the petitioners in these cases.

Justice Stevens: In your view, would the limitations issue be any different if this litigation, which is an individual litigation following the class action, had been filed in the state court rather than the federal court?

Mr. Nahmod: Yes, Your Honor.

That is one of our points.

It seems to us that... it seems to us that if indeed the petitioners are correct in their argument, then it would make a difference whether a Section 1983 class action were brought in federal court or if it were brought in state court, because surely with respect to what the state court would do, it would apply its own tolling law of renewal.

Justice Stevens: Well, not if Justice White's hypothesis is right, that as a matter of federal law which applies and which dictates the consequence of any class action--

Mr. Nahmod: But that is only... that is only procedural.

Justice Stevens: --in any federal claim later asserted, what difference would it make if the federal claim--

Justice Stevens: I mean, it seems to me that is the logic of the contrary view.

Mr. Nahmod: --We respectfully disagree, Your Honor.

In that case, this Court, through a Rule 23 interpretation, would be setting out what is a substantive matter in the state courts.

Justice Stevens: Well, the substantive matter in a 1983 case.

It is a federal claim, even though it is heard in the state court.

Mr. Nahmod: But it is not a question of substantive law in the same way as the question of when a federal cause of action accrues this.

Justice Stevens: Well, it seems to me that is... that argument is just as strong if the case is in the federal court as it is in the state court.

Mr. Nahmod: How so, Your Honor?

Justice Stevens: Well--

Mr. Nahmod: If I may ask.

Justice Rehnquist: --You don't have the right to question.

Mr. Nahmod: I am sorry, Your Honor.

I am sorry.

I am a teacher.

I am unaccustomed... I apologize.

[Generallaughter.]

Justice Stevens: Well, if it is a rhetorical question.

No, but your argument... your argument is that it is a procedural matter, and if it is a procedural matter, under 1988, governed by state law, it seems to me your argument is just as strong whether the individual's action that follows the class action is filed in federal court or in state court.

I don't see the distinction between--

Mr. Nahmod: Your Honor, our third argument is relevant if this Court, first of all, rejects our narrow reading of American Pipe, and secondly, it rejects our Section 1988 argument with respect to a void in federal statutory law, which we submit exists, because the American Pipe rule is a judicially created rule of tolling and does not apply, and is not federal statutory law.

If the American Pipe case is a Rule 23 interpretation across the board, and it applies to all federal class actions, including not just 1983 class actions but diversity class actions, then we submit that it would raise several... some very serious problems under the Rules Enabling Act, at least as applied to these Puerto Rico plaintiffs, because the Rules Enabling Act sets out a limitation on Congressional power and this Court's power to promulgate rules of procedure.

Such rules must not abridge or modify substantive rights.

The Puerto Rico Supreme Court has characterized its limitation scheme as substantive.

Now, I grant you that is not enough, because whether substantive rights are abridged by a federal rule is a question of federal law, not a question predominantly of state law, but yet this Court has in the past looked to the importance of the particular limitations scheme or the particular rule of the state and asked whether that is substantive.

Now, the Court has done so on the Ragan case and even more recently in the Walker case.

We are using Ragan and Walker for the proposition that one cannot separate limitations and tolling provisions from one another.

Justice Rehnquist: What is the rule in diversity under Erie where you want the case to come out the same way in state courts... in federal courts as it would in state courts?

That may have no application to a non-diversity case.

Mr. Nahmod: It may have no application to a non-diversity case, Your Honor, but as we have argued, this is a Section 1983 case, and Congress has left certain matters silent in Section 1983 cases.

One of those matters is a limitation scheme and its tolling provisions.

So, there is only an analogy to the Rules of Decision Act.

We don't claim that the Rules of Decision Act applies here.

I think this Court suggested in the Holmberg case in the forties that the Rules of Decision Act does not generally apply to federal statutory causes of action.

The Puerto Rico Supreme Court has characterized its statutes of limitations as substantive.

Those statutes of limitations and tolling provisions are not designed for procedural fairness as such, but are rather designed to protect states of mind and social utility.

It is therefore our view that at least as applied to these plaintiffs in these cases, the rules... Rule 23, given the very broad interpretation that has been suggested, would violate the Rules Enabling Act, and as such it could not validly be applied to these Puerto Rico plaintiffs.

Your Honor, if I may say a few more things in connection with some of the observations that were made by the defendants, we did not simply wait for four or five months after class certification was denied to file these individual lawsuits.

The plaintiffs here moved for leave to join as parties plaintiffs, and that motion was denied, and the motion for reconsideration was denied as well.

If there are no other questions, I am finished.

Chief Justice Burger: Very well.

We will resume at 1:00 o'clock at this point for the rebuttal.

Mr. DeGooyer.

ORAL ARGUMENT OF JOHN G. DE GOOYER, ESQ., ON BEHALF OF THE PETITIONERS -- REBUTTAL

Mr. De Gooyer: Mr. Chief Justice, thank you.

Simply two points.

Particularly in response to the questioning of Justice Stevens and Justice O'Connor, I wish certainly to make clear that while we disagree and have disagreed with the First Circuit's view of Puerto Rico law, our position does not depend on a finding by this Court that the First Circuit misconstrued Puerto Rico law.

Our position is that Rule 23 controls either as an overriding general federal rule of procedure or, if necessary, as the federal choice under Section 1988.

Finally, it must be kept in mind that, as we have suggested to the Court, that there is a purpose to be served by the rule of American Pipe.

Its purpose is to promote judicial efficiency and economy by providing not only that the running of the statutes of limitations be tolled, but that the tolling end as soon as it has served its purpose.

As this Court said in American Pipe, this rule of suspension is the

"rule most consistent with federal class action procedure. "

Thank you very much.

Unidentified Justice: Counsel, could I ask you a question on American Pipe?

Mr. De Gooyer: Yes, Justice Blackmun.

Unidentified Justice: As I understand it, your position is that American Pipe selected a suspension rule and rejected a renewal rule, correct?

Mr. De Gooyer: I would certainly say it selected a suspension rule, that's correct, for the reasons I have stated, and if that necessarily implies rejecting a renewal rule, that is correct, but I don't know that we need reach that.

Unidentified Justice: Well, my question isn't really whether that is isn't dictum in American Pipe, because under either rule those plaintiffs have been taken care of.

Mr. De Gooyer: I am not certain I understand your question, Justice Blackmun.

Unidentified Justice: Well, the plaintiffs' claims there were found to be timely under the suspension rule, but wouldn't they have been timely under a renewal rule as well, and therefore isn't the statement on which you rely in American Pipe dictum?

Mr. De Gooyer: The suspension statement.

Is that what Your Honor means?

Unidentified Justice: Yes.

Mr. De Gooyer: I am still not sure I understand that question.

Whether there was a renewal by the filing of the class action?

Is that what Your Honor means?

Unidentified Justice: Let me start over again.

Your position is that American Pipe selected a suspension rule, and you hesitate a little by saying, well, maybe it didn't reject a renewal rule, and my point is that even if it did purport to select a suspension rule, wouldn't that aspect of the decision be dictum?

Mr. De Gooyer: I think not.

I think what the Court was doing was interposing the power of equity to freeze the rights of the parties under the statute of limitations as of the time the class action suit was filed to determine whether the class action should be maintained, and when it concluded that it should not, equity removed itself from the... from the law and the statute simply resumed to run.

I don't--

Unidentified Justice: In that case, the plaintiff's claims would have been timely under either rule.

Mr. De Gooyer: --The plaintiffs in this case?

Unidentified Justice: No, in American Pipe.

Therefore it is dictum.

Mr. De Gooyer: I don't quite follow whether it's dictum, but I find that they accepted and adopted a rule that found them timely.